Brazil’s Export Revenue Rise is Temporary, Says WTO Director

RIO DE JANEIRO, BRAZIL – Speaking yesterday, September 5th, at the 7th South American Agriculture Forum in Curitiba, Edwini Kessie, director of the World Trade Organization‘s (WTO) Agricultural and Commodities Division, said Brazil’s current profits from increased exports are temporary, particularly from soybeans to China, amid the Asian country’s trade war with the United States.

Kessie stressed that should Brazil now increase investments in order to export more of its soybeans, when the United States resumes selling the product to China, prices would tend to slump, which could hurt the Brazilian sector.

Regarding the impact of the trade war on the world economy, he said that the effects will not be significant if there is an agreement in the short term.

The director stated that this war is not favorable to the world, because it generates uncertainty. “This is not good for businesses requiring predictability”.

Trade balance

According to Fábio Carneiro Cunha, foreign trade consultant, the trend is for Brazil to maintain trade balance gains for another year.

He emphasized, however, that the dispute between the two countries also leads to an increase in imports of electronic and plastic products, for instance, affecting Brazilian industry. According to the director, this occurs because China and the United States start shipping these products to countries such as Brazil.

“There has been an increase in soybean and corn exports. But at the same time, there has been an increase in imports from both countries from sectors that are suffering from this, such as e-commerce and plastics. So, those who are prepared to export have a transitory benefit, but those who ordinarily have difficulties with foreign trade are suffering even more,” he said.

The trade dispute between China and the United States last year increased Brazilian exports to China by US$8.1 billion (R$32.4 billion) in 2018, compared to the previous year. Domestic sales grew from US$22.589 billion in 2017 to US$30.706 billion.

The highest leap in export value was recorded for soybeans. Chinese producers bought US$7 billion more last year than in 2017. The data are from a survey released in May by the National Confederation of Industry, which cross-referenced data on American products with high import taxes.

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